Friday 29 Mar 2024
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CURRENT changes to the shareholding and board of Ni Hsin Resources Bhd indicate that the Taiwanese founders are relinquishing control, and that investors from Ideal Jacobs Corp Bhd are taking over the management of the steel cookware maker.

The latest stock exchange announcements indicate that the Tsiao family members from Taiwan have found  takers for their stakes in investors from Ideal Jacobs and Perlaburan Mara Bhd.

According to a business partner of the Tsiaos, family members are expected to complete their sales of Ni Hsin shares, while key directors of Ideal Jacobs are expected to manage the company, by the end of this month.

“By the end of this month, all shares to be sold, which are quite substantial, will be crossed. But the family will keep a small percentage,” the source tells The Edge.

“There are several reasons for their exit. One is that they feel it’s time to call it quits after having been here for 30 years. Also, the pioneer status and tax incentives given to Ni Hsin to manufacture the Buffalo brand of cookware have expired,” he adds.  

Various Tsiao family members began to dispose of substantial stakes in Ni Hsin via direct deals from mid-September, according to filings with Bursa Malaysia. These include disposals by Ni Hsin chairman Hsiao Chih Jen and managing director Hsiao Chih Chien, as well as by three other family members.

The family’s combined shareholding of 58% had been  sold down to 35% by mid-October.Early last week, the family further sold down their stake to 25% via direct deals.

Soon after these direct sales, two directors of Ideal Jacob, and two others linked to the company, were appointed to the Ni Hsin board, which now has nine members.

“There is no reason for four people linked to Ideal Jacob and the oil and gas sector to appear on the board of Ni Hsin if there are no common investors. After taking over Ni Hsin, we will venture into the oil and gas sector,” says the source, who is one of the common investors.

On Nov 4, Ni Hsin announced the appointment of Chen Shien Yee as executive director. Chen currently holds the same position at Ideal Jocobs.

This followed Rizvi Abdul Halim’s appointment as  Ni Hsin’s independent director on Oct 10. Rizvi is a director in Ideal Jacobs, which is now undergoing a reverse takeover (RTO) exercise with two oil and gas outfits.

On the same day, Datin Ida Suzaini Abdullah was appointed an executive director of Ni Hsin. Ida Suzaini, who had worked for several oil and gas companies before, is not from Ideal Jacobs and is believed to have been appointed by the common investors.

On Oct 31, Md Nazir Md Kassim was appointed an independent non-executive director of Ni Hsin and a member of its nomination committee and remuneration committee. Nazir is managing director of Mecip Global Engineers Sdn Bhd, one of the two firms involved in the reverse takeover of Ideal Jacobs.

In an interview with The Edge last month, Ida Suzaini had confirmed market talk that Ni Hsin plans to enter the oil and gas sector and that the new investors were talking to several small oil and gas players in the region.

It is learnt that the new investors are looking at an existing brownfield in a neighbouring country, which is producing 600 to 700 barrels of crude oil per day. The deal, if struck, could cost Ni Hsin about RM50 million.

It is also learnt that Mara is a friendly party to the new investors. Mara had bought 12 million shares or a 5.2% stake in Ni Hsin, it was announced on Nov 3.

The recent developments have kept Ni Hsin’s share price firm, from previously subdued levels. In the past two weeks, the share price has hovered at about 50 sen apiece.

The stock had begun to rise in early September on market talk that Ni Hsin was diversifying into the oil and gas sector. From 15 sen a year ago, its share price hit an all-time high of 52.5 sen in late October.

chen_idealjacobs_1040Ida Suzaini had told The Edge that Ni Hsin would venture into exploration and production and “if everything goes according to plan, we should see a deal soon and some solid projects within 12 months”.

Ni Hsin, which only has a paid-up capital of RM47.32 million, will have to raise funds via a rights issue or other corporate exercises to fund its oil and gas venture.

But, in response to Bursa queries, Ni Hsin had said that its oil and gas venture plans have not been discussed at the board level.

For the first half of 2014, the company incurred a net loss of RM251,000 on reduced revenue of RM19.89 million. Last year, it posted a net profit of RM2.28 million on revenue of RM55.15 million.

This article first appeared in The Edge Malaysia Weekly, on November 10 - 16, 2014.

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